Should the buck extend the ascent in the near term, gold will struggle to challenge the psychological level
Gold bounced aggressively at the end of last week to register mid-May highs just below the $2,000 psychological level. Earlier in the month, the metal briefly dipped to fresh March lows around $1,810 before bouncing strongly. Now, the technical picture has improved as the bullion is holding well above the key SMAs.
After another mentioned spike, the XAUUSD climbed to the $1,993 zone, preserving gains during the European hours on Thursday. Should gold stay above the $1,980 zone in the near term, the $2,000 high will come back into the market focus. If the pressure reemerges any time soon, the bullion could get back below the mentioned support.
On the weekly timeframes, the bullion looks upbeat as the metal bounced strongly from the key SMAs. On the upside, the immediate target is now represented by the $2,000 region. On the four-hour charts, the XAUUSD pair is now well above the 20-SMA while the RSI shows a modest bearish bias, suggesting the pair could struggle to extend the rally in the immediate term.
Interestingly, the precious metal keeps rising along with the dollar now. The USD index climbed back above the 106.00 figure that has turned back into support. Today, the DXY is trading around 106.75, retaining positive bias for the third session in a row as buying interest has reemerged amid another rally in US Treasury yields. So, the buck is now slightly below cyclical tops and could retest the 107.00 figure if the buying pressure intensifies in the near term.
However, should the buck extend the ascent in the near term, gold will struggle to challenge the $2,000 psychological level. For this barrier to be broken, the XAUUSD pair would need a solid bullish driver. In the immediate term, gold could stay elevated, but a local downside correction is possible as well, especially as the bullion looks overbought at this stage.
